Endeavour Financial loses $111.1-million (U.S.) in Q2

2009-02-09 10:14 EST - News Release

Mr. Neil Woodyer reports

ENDEAVOUR REPORTS FINANCIAL RESULTS FOR QUARTER ENDED DECEMBER 31, 2008

Endeavour Financial Corp. had a net loss of $111.1-million (U.S.) or $3.68 (U.S.) per share, for the quarter ended Dec. 31, 2008. This compares with net income of $1.5-million (U.S.) or five U.S. cents per share for the quarter ended Dec. 31, 2007.

The loss during the quarter is principally driven by an investment loss of $109.8-million (U.S.) comprising realized losses on the sale of investments of $28.0-million (U.S.), interest and dividends of $300,000 (U.S.) and a mark-to-market loss on the investments of $82.1-million (U.S.). Advisory fee revenue during the quarter was $2.4-million.

The financial results in the quarter ended Dec. 31, 2008, are a direct result of the continued sell-off in the global markets, which resulted in significant mark-to-market losses on the corporation's investment portfolio. Including the effects of the mark-to-market adjustments noted above, the corporation's book value was $125-million (U.S.) (or approximately $4.98 per issued and outstanding share), compared with $236-million (U.S.) (or approximately $8.31 per share) as of Sept. 30, 2008.

At Dec. 31, 2008, the corporation had cash and cash equivalents of $4.8-million (U.S.), investments of $63.9-million (U.S.) and a working capital position of $68.9-million (U.S.) see subsequent events for the corporation's recent equity offering, completed as reported in Stockwatch news on Feb. 4, 2009).

Neil Woodyer, president and chief executive officer, commented: "Despite our second-quarter results, we continue to aggressively pursue investment opportunities and specifically those in the precious metals sector. The recent successful recapitalization of the corporation as a result of the completed equity offering for gross proceeds of $115-million has enabled us to remain pro-active and competitive. Our primary objective to maintain long-term performance has not changed."

Resource transactions included the following:

• During the quarter ended Dec. 31, Endeavour, financial adviser to Bisha Mining Share Company, a subsidiary of Nevsun Resources Ltd., arranged an $89-million (U.S.) commitment from Industrial Development Corp. of South Africa toward the development of the Bisha project, located in Eritrea.
• Endeavour Financial was engaged by Dannemora Mineral AB as its financial adviser in October, 2008, to assist in financing the company's Dannemora iron ore project, located in Sweden.
• Endeavour Financial is advising Rusoro Mining Ltd., which launched a takeover bid for Gold Reserve Inc. as reported in Stockwatch news under RML on Dec. 15, 2008.

Dividend policy highlights included the following:

• The current market environment will give rise to many opportunities, and accordingly the board has elected to suspend the monthly dividend for the foreseeable future.

Subsequent events included the following:

• As reported in Stockwatch news on Feb. 4, 2009, the corporation closed an equity offering of 65 million units ($1.77 per unit; each unit consisting of one ordinary voting share and one-half of one share purchase warrant) for gross proceeds of $115-million. Net proceeds from the offering will be used for investments in the natural resource sector.
• Subsequent to the second quarter, Fiore Financial Corp. (a corporation led by Frank Giustra) entered into an agreement with Endeavour to extend its existing exclusive agreement to Jan. 31, 2012. Fiore Financial assists Endeavour in sourcing and developing new investment opportunities.

Conference call details include the following:

• Management's discussion of the financial results for the quarter ending Dec. 31, 2008, will be webcast on Monday, Feb. 9, 2009, at 11 a.m. Eastern Standard Time and can be accessed from the corporation's website and by calling the operator at 201-689-8031 or toll-free 1-877-407-8031 prior to the scheduled start time. The call will be archived for later playback on Endeavour's website until Feb. 9, 2010.

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